H-1B Applications: A Trickle, a Torrent or Something Else?

There are lots of litmus tests used to determine the severity and probable length of the recession, most of them related to spending and/or employment. One being watched with interest by the tech industry is the number of applications received for H-1B visas, which allow U.S. employers to hire skilled foreign workers.

Already, the pace appears to have slowed. In 2007, the number of applications exceeded the available number of visas on the first day the government began accepting them. Citizenship and Immigration Services stopped accepting applications after two days, then used a lottery to award visas. The agency received 163,000 applications in the five days it accepted them in 2008. Of those, 131,800 were for standard H-1Bs, of which 65,000 are available under the current cap. The USCIS also got 31,200 applications for the 20,000 H-1Bs reserved for applicants with advanced degrees. Again, a lottery was used.

We're now a week into this year's application acceptance period with no reports of the usual inundation. The government is still accepting applications.

Some companies may be scaling back their applications due to fear of political repercussions. As I wrote a few weeks ago, a provision in the economic stimulus package places H-1B restrictions on companies receiving funds from the Troubled Assets Relief Program. Since then, reports have surfaced that several U.S. banks plan to reduce their numbers of H-1B workers. One financial services company that has no plans to do so, however, is Goldman Sachs. Said Chairman and CEO Lloyd C. Blankfein:

The U.S. has always been a magnet for many of the most talented, hungry and qualified people in the world. Especially at this time in our economy, do we really want to tell individuals who will help companies to grow and innovate - ultimately creating more jobs - that they should go work elsewhere?

The tough economy and slowing pace of overall hiring appears to be causing others to file fewer applications. Microsoft's general counsel just announced the company, one of last year's largest recipients of H-1Bs, is seeking substantially fewer visas this year. Earlier this year, Microsoft said it planned to shed 5,000 jobs in the most comprehensive jobs reduction in its history. Business is also off for Indian outsourcing companies like Wipro and Infosys, which received the most H-1B visas last year with 7,237 between them.

According to a Computerworld story, it's been 13 years since fewer than 65,000 H-1B visas were issued. Prevailing wisdom, reports Computerworld, is that while far fewer applications may be submitted this year, they will still exceed the number of available visas. With many folks comparing tech hiring patterns during the current recession to those during the economic downturn that followed the dot-com bust, it will be interesting to see just how much demand for H-1Bs drops.

The government issued 163,600 visas in fiscal 2001, fewer than the 195,000 then allowed. Following the bust, just 79,100 were issued in fiscal 2002, prompting the government to revert to its previous annual cap of 65,000 visas in fiscal 2003. The cap has remained unchanged since then, despite the efforts of tech companies and others to persuade the government to raise it.

A recent proposal, put forth by a Homeland Security policy analyst and a research assistant at The Heritage Foundation recommends returning the annual cap to 195,000 and making the cap flexible so that it could automatically increase when a quota is met. They also suggest carrying over any unused visas to the next fiscal year. An action like this seems highly unlikely any time soon for the perenially controversial visa, especially with the economy in such a protracted slump.

The New York Times just published comments from some of the best-known proponents and opponents of H-1Bs, several of whom I have interviewed myself. I think their comments provide a nice snapshot of some of the major issues surrounding not only the H-1B program, but broader U.S. immigration policies. The piece also mentions an article on the topic will be published in the Times this weekend.

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